Thailand's Decorative Paint & Coating Product Market Leader TOA Paint (Thailand) Public Company Limited ("TOA") to list on SET and Raise Funds Through IPO to Fund Plant Expansion in ASEAN

Back07 Aug 2017

TOA, a leading paint and coating producer and distributor in Thailand, is on course for an SET listing. It has outlined its vision to be a market leader in the South-East Asia paint and coating market by offering market-leading products and services. SEC has begun count day 1 of TOA’s IPO application and filing. TOA plans to use the funds raised from the IPO offering to expand its business in Thailand and overseas, including developing and improving operational efficiencies and for working capital.

Mr Jatuphat Tangkaravakoon, Chief Executive Officer of TOA, stated that TOA has significant experience in manufacturing paints and coatings and strong brand recognition in Thailand and ASEAN market. TOA also has market-leading technology and services, and is dedicated to research and development efforts to produce innovative, high-quality paint and coating products that are safe and eco-friendly, to respond to consumption needs and maximize customer satisfaction.

The more than five decades of experience of our founders, together with our well-known brands and research and development, all contribute to TOA’s position as the largest producer and distributor of decorative paint and coating in Thailand (in terms of sales revenue), with market share of approximately 48.7% in Thailand in 2016 and a market share of approximately 13.0% in ASEAN according to Frost & Sullivan (S) Pte Ltd. [Does F&S need to consent to include this reference in the press release?]

“We have a vision to be a leader in the paint and coating market in ASEAN, which will be achieved by offering market-leading products and services. We also believe that we will benefit from the ASEAN Economic Community (or AEC) which is expected to have high market growth”, he said.

Mr Pongcherd Jameekornkul, President, noted that our products are organized into two main groups including 1) decorative paint and coating products and 2) non-decorative paint and coating products. Decorative paint and coating products include premium, medium and economy grades and other products with a total of approximately 9,106 SKUs under 114 different brands. Our leading brands include SuperShield, SuperShield DURACLEAN A+, TOA 7 in 1, TOA ExtraWet, TOA GLIPTON, TOA Shield-1 Nano, 4Seasons, Supertech, Super Matex, KOBE and Mandarin Duck. There are also brands for those manufactured and distributed by Captain Coating Co Ltd and those distributed by British Paints Co Ltd, both of which are TOA’s subsidiaries. Sales of decorative paint and coating products represented 70.2% of TOA’s total revenues in the first quarter of 2017. Non-decorative paint and coating products include wood coatings, construction chemicals, heavy duty coatings, hardware and other non-decorative products with a total of approximately 2,730 SKUs. Non-decorative paint and coating products are marketed and distributed under 88 brands, including our in-house brands such as TOA, Wood Stain, HeavyGuard, TOA Construction Chemicals, WIN, KOBE, as well as third-party brands for products not manufactured by us such as RYOBI. Sales of non-decorative paint and coating products represented 26.3% of TOA’s total revenues in the first quarter of 2017, he said.

As of 31 March 2017, TOA owned eight production plants (combined production capacity: approximately 88.0 million gallons per year, excluding the plant owned by TOA Skim Coat (Cambodia) Co Ltd for which regulatory approval is pending) in six countries, three of which are located in Thailand and the remainder are located in Vietnam, Laos, Malaysia, Myanmar and Cambodia. It also had three new plants under construction, one in each of Indonesia (expected to begin commercial operation in Q2/18), Cambodia (to be operated by TOA Paint (Cambodia) Co Ltd and expected to begin commercial operation in Q4/18) and Myanmar (to be built in Thilawa Special Economic Zone after relocation from Yangon, and expected to begin commercial operation in Q3/18). With the completion of these three new production plants’ capacity after construction is complete, we expect that total production capacity in AEC will increase by approximately 15.1 million gallons per year or approximately 17.1% from current capacity (excluding the plant operated by TOA Skim Coat (Cambodia) Co Ltd), which would enhance our competitiveness and TOA's market share in the AEC paint and coating product markets.

TOA has built a nationwide distribution network that as of 31 March 2017 consisted of i) approximately 6,080 retail dealers in 787 districts in 77 Thai provinces and approximately 1,744 in other AEC markets; ii) modern trade stores; and (iii) other channels (e.g. project developers, exports). It has also launched “TOA Color World Solution Services” for customers, employing its auto tinting machines (4,075 in Thailand and 1,763 elsewhere in the AEC, as of 31 March 2017) which can create more than 10,000 colours in three minutes and thereby reducing the retailers’ inventory carrying costs. In addition, it has partly automated its manufacturing process and has always been committed to promoting eco-friendliness and research and development of innovative products. We, for example, were the first decorative paint and coating producer in Thailand and ASEAN to successfully introduce lead and mercury-free emulsion paints in 1977, and to successfully implement acrylic technology from the US in 1979.

Mr Manpong Senanarong, Managing Director, Kasikorn Securities Public Company Limited, as a Co-Financial Advisor, added that TOA has great potential to grow both locally and across ASEAN, thanks to its well-known brands and high quality products recognized by all consumer groups, including customers, painters, contractors and project owners in both public and private sectors. Moreover, TOA has a strong research and development team that continuously strives to create innovative and eco-friendly products. In addition, the company has a extensive nationwide distribution network. The company has also been building plants in the Indonesian, Cambodian and Myanmar markets, all of which have strong prospects for growth in line with ASEAN’s economic expansion, which means that TOA has ample room for growth in terms of customer base.

Mr Pichet Sithi-Amnuai, President, Bualuang Securities Public Company Limited, as another Co-Financial Advisor, commented that the Office of Securities Exchange Commission (SEC) has started count day 1 of the application and filing submitted by TOA for an initial public offering (IPO) of its ordinary shares. TOA's current registered capital stands at THB 2.029 billion, divided into 2.029 billion shares with a par value of THB 1 each, 1.775 billion of which have been issued and paid. TOA is seeking to offer up to 507.6 million shares, comprising up to 254.0 million primary shares and up to 253.6 million secondary shares that are currently held by an existing shareholder (Wybrant Holding Limited), which would represent up to 25.02% of the number of TOA's post-IPO issued and paid shares, he added.

Subject to SEC approval of the IPO application and filing, as well as market and other conditions, IPO dates would be set and TOA would likely list on the Stock Exchange of Thailand (SET) within this year. The funds raised by the IPO would be used to expand business in Thailand and overseas, including developing and improving internal control [see earlier comment] efficiencies and for working capital. [This last sentence is repetitive with the previous mention about use of proceeds; consider deleting/ revising?]